Cement Consumption in Indonesia Declines in 2014
Growth of cement sales in Indonesia is estimated to have slowed in 2014 amid uncertainties brought about by the ‘political year’ (referring to the fragmented results of the country’s legislative and presidential elections and which led to the postponement of various infrastructure projects and other investments in Indonesia). Other factors that impacted negatively on cement sales this year were the central bank’s higher interest rate policy, low commodity prices and weakening purchasing power.
Chairman of the Indonesia Cement Association (Asosiasi Semen Indonesia, or ASI) Widodo Santoso said on Tuesday (09/12) that domestic cement sales rose by 3.4 percent year-on-year (y/y) in the January-November 2014 period to 54.6 million tons. The annual growth pace of cement sales in full year 2013 was 5.6 percent. Cement sales are a key indicator for construction activity (infrastructure and property development absorb most cement) and closely linked to a country’s general gross domestic product (GDP) growth. Therefore, Indonesia’s current economic slowdown appears in tandem with slowing cement consumption. In the third quarter of 2014, Indonesia's GDP growth was recorded at 5.01 percent (y/y), the slowest pace in five years.
Forecasts for Indonesian cement sales in 2015 are more positive as the new Joko Widodo-led government is expected to enhance infrastructure development, such as the Trans Sumatra, Medan-Kuala Namu, and Manado-Bitung toll roads, as well as a series of new (or renovated) seaports across the archipelago. The Indonesia Builders Association (Gapensi) recently stated that Indonesia’s construction business (which includes the construction of roads, offices and houses) is estimated to grow by approximately 16 percent (y/y) in 2015. Andi Rukmana, Secretary General of Gapensi, requests the government to pay close attention to land-clearing as this matter is a well-known obstacle for infrastructure development in Southeast Asia’s largest economy.
Indonesian Cement Sales 2008-2013:
| Year | Cement Sales |
YoY Growth |
| 2013 | 58 million | +5.6% |
| 2012 | 55 million | +14.6% |
| 2011 | 48 million | +20.0% |
| 2010 | 40 million | +4.2% |
| 2009 | 38.4 million | +1.1% |
| 2008 | 38 million | - |
¹ forecast
Source: Indonesia Cement Association (ASI)